March 11 (Bloomberg) -- Chikako Nishihara, 64, has been
living in a 215-square-foot (20-square-meter) temporary
apartment in Sendai prefecture with her eldest son since Japan’s
deadliest earthquake in March 2011 left her home uninhabitable.

“It’s cold in the winter and the walls are so thin that
you can hear our neighbors’ footsteps; they must hear us too,”
said Nishihara, whose heart condition has worsened since the
catastrophe. “We thought about buying, but because of my
illness, I can’t take out loans. The only way out of this is to
move to public housing.”

Nishihara and her son are among about 98,000 people still
living in temporary accommodation three years after the March
11, 2011, temblor that triggered a tsunami in northeastern
Japan, leaving about 19,000 people dead or missing and hundreds
of thousands homeless as it wiped out entire towns. Only 3.4
percent of the planned public housing has been built because of
a shortage of laborers and building materials, according to the
government.

The delay after the magnitude-9 quake underscores the
difficulty of attracting builders for reconstruction projects
because the prices the government can pay for the work aren’t
high, said Hidetaka Yoneyama, an analyst at Fujitsu Research
Institute in Tokyo.

‘Really Bad’

“There just aren’t enough people and the government may
need to raise prices to attract builders for such projects,”
said Yoneyama, who has written at least five books on Japan’s
housing market. “The delay means that we haven’t really got the
victims out from the disaster situation yet. This is really
bad.”

Only 1,011 units out of a proposed 29,500 for public
housing were completed as of February in eight prefectures in
the northeast, according to estimates from the land ministry.
Japan set up the program for people who lost their homes in the
disaster and are unable to rebuild on their own.

“I hope that more people will be able to be in new homes
next March 11,” Prime Minister Shinzo Abe said at a press
conference yesterday.

‘Decent Living’

Nishihara, who lives in the Asuto Nagamachi temporary
housing near Sendai station, said she was forced to move out of
her rented house after the landlord decided to tear it down
because of damage it sustained in the temblor. When she
attempted to apply for new public housing in the prefecture,
closer to the coast, where her second son was living, he told
her that the project was expected to be mainly for those whose
homes had been washed away in the tsunami.

“He suggested that those are not really for someone like
us because we didn’t quite lose our house in the tsunami,”
Nishihara said. “We don’t need many rooms and even if living in
public housing means paying rent, we can at least make a decent
living there.”

Two-thirds of those left in the Asuto Nagamachi project are
elderly like Nishihara, above 60 years, with many suffering
medical conditions, Masahiro Iizuka, who heads a community
association, said in an interview. Younger people, who found new
jobs, have managed to leave after rebuilding their damaged homes
or buying new places, he said.

“They cannot see the light at the end of the tunnel, so
they are not even getting adequate medical treatment, saying
they want to save money,” Iizuka said. “It’s reaching their
limit of patience.”

Tackling Backlog

Out of 267,419 evacuees, 98,124 were still living in
temporary housing as of Feb. 13, according to the Reconstruction
Agency, which is overseeing the rebuilding after the 2011
disaster.

More than 11,500 units in Fukushima, Iwate and Miyagi
prefectures will be completed by March 2015, clearing up some of
the backlog, according to the agency. The apartments typically
take a year to 18 months to complete, said Hiroyuki Takahashi,
deputy director at the housing division of the land ministry.

The disaster has made it difficult to locate the owners of
properties while some are reluctant to sell, contributing to the
delay in buying the land, said Koichi Mori, a spokesman at the
agency.

Material Shortage

“No companies are available to take on the projects,”
said Yasutaka Yamaguchi, a housing planner at the Iwate
prefecture office. The region was the worst hit by the quake and
tsunami, with more than a quarter of the people dead or missing
coming from the prefecture, he said. “There is a shortage of
building materials too.”

The government is taking steps to accelerate the recovery.
About 69 percent of land needed for the public housing program
was acquired as of December, up from 48 percent in September,
after the government shortened the time to process purchases,
the Reconstruction Agency said in its latest progress report on
March 7.

The construction period was shortened by as much as 18
months after the government adopted measures including simpler
procedures for signing building contracts, the report showed.
The government has also increased contract unit prices by as
much as 8.4 percent from a year earlier, it showed.

Local governments are also taking steps to quicken the
rebuilding. Iwate in January offered to reimburse additional
costs such as living expenses to attract contractors from
outside the prefecture, said Yamaguchi.

More Housings

Iwate will build 6,038 dwellings, while Miyagi prefecture
plans to construct 15,543 units, Takahashi said in an interview.
Aomori, Ibaraki, Chiba, Nagano and Niigata prefectures will
erect a total of 390 units, he said, adding that 27 percent of
the planned units in Iwate and Miyagi are currently under
construction.

Fukushima prefecture, where Tokyo Electric Power Co.’s
wrecked nuclear plants are located, may build 7,500 units,
according to an estimate from the land ministry.

“From now on, we will start to see more and more units
being completed,” Takahashi said.

The earthquake, the biggest in Japan’s recorded history,
generated a tsunami along 860 kilometers (534 miles) of
coastline and knocked out power supply, leading to meltdowns of
three reactors. About 160,000 people had to be evacuated in the
area 240 kilometers north of Tokyo. The area near Dai-Ichi
nuclear station remains a public no-go zone.

Nuclear Disaster

“Every time I exchanged words with local people, I learned
the depth of their pain and felt again the scale of sin brought
by the nuclear power disaster,” Nuclear Regulation Authority
Chairman Shunichi Tanaka said in a speech in Tokyo today. “We
must not forget the fact that residents have been forced to do
so.” The NRA was formed in September 2012 as an independent
watchdog to replace the previous regulator.

All those still in temporary housing want is to “live like
a human being,” said Iizuka from the Asuto Nagamachi community
association.

“Temporary housing is becoming very old everywhere; most
people want to move to public projects,” he said. “The
reconstruction isn’t taking shape in a way that we can see any
progress.”